No matter how successful your business, today you can't stand still.

Twenty years ago, many prosperous business operated on auto-pilot - once retailers, manufacturing firms or financial advisors had a solid base of customers and were nicely profitable, many simply kept repeating the things that had made them successful. If it ain't broke, don't fix it was the watchword.

Today, that approach guarantees failure ... in a world of intense competition and increasingly demanding customers, anyone who stands pat will be left behind. The only formula for ongoing success today is a commitment to constant improvement.

One key to making that happen is to identify the most important goals for your business and then key performance indicators (KPIs) to track your progress against those goals.

And then having done that, you need to schedule thirty minutes each month to review how you're doing against those key performance indicators. Arguably, the time to do this is your  highest payoff use of 30 minutes each month.

Comparing your performance

All advisors should track performance in four categories - financial performance, practice performance, existing clients and new clients.  In the perfect world, you'd be able to compare how you're doing against a peer group of comparable advisors ... whether at your branch, your firm or the industry as a whole.

Everyone will have different goals and different KPIs to track those goals ... what's important is that you clearly define the goals that are right for you.  At the end of this article are some key performance indicators to consider.

Meanwhile, here are some results reproduced with permission from the most recent Insights whitepaper by investment industry software firm PriceMetrix. This report features 2008 to 2010 data from 15,000 advisor books at a broad range of Canadian and US firms; these advisors worked with over 2 million investors representing assets of $850 billion (so an average account size of $400,000.)

Note that the firms PriceMetrix works with tend to be full service securities firms, so the actual numbers may not be directly relevant to advisors with other business models, although the overall trends should be.

Key trends for successful advisors:

Some overall observations from the PriceMetrix report:

1. At the end of December 2010, the average advisor had 193 household relationships representing assets of $72 million and average gross revenue for 2010 was $522,000.  For most advisors, the past two years have seen a substantial increase in productivity, with significant increases in assets and revenue per household.
2. Contributing to that increase in productivity was that households with less than $50,000 in assets dropped from 56% to 45%.
3. Fee-based accounts represent a growing portion of advisor books, at 24% of assets, up from 19% two years ago. Note that fee based accounts have seen a slight compression of revenue as a percentage of assets.
4. The average advisor attracted 14 new clients in 2010, compared to 16 in 2009 and just 9 in 2008.

                                                                                          2008       2009      2010    % chg 08-10                  

Assets, production and households:

Assets (millions)                                               $66       $61         $72         8%      

Revenue (000)                                                $488     $444       $522         7%           

Client households                                            202       201         193          (4%) 

Households < $50 K assets                               56%      50%         45%        (20%)

Fee-based business:                                                                                                                                 

Fee-based accounts/advisor                              51             61           76          43%            

Fee-based assets (million)                               $15           $15           $19         27%            

Fee-based assets                                             19%          20%         24%       26%             

Fee revenue as % of assets                              1.41%       1.31%       1.32%     (6%)               

 % of fee assets priced > 1%                              71%         62%         60%       (15%)                     

Per household measures:                                                                                                                                                   

Assets per household ($000)                             $328          $301     $370         13%         

Revenue per household                                      2453       $2405      $2944     20%               

 % with multiple accounts                                    51%          52%         54%       6%       

New clients attracted:                                                       9             16            14         57%    

Source: PriceMetrix Report on the  of Wealth Management           

Possible Key Performance Indicators

Below are some possible performance indicators against which to track progress.

Note that no one should try to monitor this entire list, you need to focus on the ones that are key for your business. And once you've identified the relevant performance indicators, you need to set aside time at the beginning of each month to monitor your progress against your goals.  Doing that will help you move your practice forward and avoid the stagnation that's the kiss of death for any business these days.

Possible KPIs: Financial performance                                                                                                   

Assets          

Gross revenue

Expenses

Net revenue                                                                                                                                      

Possible KPIs: Practice performance:                                                                                                 

% of assets in fee based accounts                                                                                              

% of accounts generating under $500 in gross revenue (Note that the actual threshold for small accounts will very much vary with each advisor)                                                                                      

# of in person portfolio reviews with A clients                                                                              

% of A clients with whom conducted portfolio review (in person or over phone)

Possible KPIs: Existing clients:                                                                                                                         

# of client defections with assets over $250,000 (or whatever your threshold is for a meaningful client)                                                                                                                 

% of clients with multiple accounts

% of clients with financial plan in place                                                                                                       

% of clients with multiple needs met (investments, insurance, education savings, TFSA)                  

% of clients scoring a 9 or 10 out of 10 on satisfaction, based on a third party satisfaction measure   

# of referrals                                                                                                                                 

Possible KPIs: New clients                                                                                                                    

# of new clients                                                                                                                                  

# of meetings with qualified prospects

# of qualified prospects in pipeline

# of qualified prospects added to pipeline

Possible KPIs: Key ratios:                                                                                                        

Gross revenue as % of assets                                                                                                 

Net revenue as % of assets

Expenses as % of gross revenue